Mathew McDermott, Goldman’s head of digital assets, said the Goldman Sachs Group planned to turn its digital assets platform into an industry-owned blockchain. The new venture will allow large financial firms to create, trade, and settle financial instruments through blockchain technology.
McDermott disclosed that the bank was in early-stage discussions with industry stakeholders to develop the new company’s commercial use cases and platform’s capabilities before executing the ‘spin-out’ in the next 12 to 18 months. McDermott said that while the new blockchain platform was to be owned by a separate entity, Goldman planned to retain its digital assets team to continue the bank’s expansion activities in the space.
Goldman Sachs’ blockchain venture to tokenize funds as collateral
According to a Bloomberg report, the $3 trillion investment bank was set to turn its digital assets platform into a new blockchain company. The spin-out aims to speed up asset trading and settlement processes for large-scale financial institutions. McDermott disclosed that the ambition was for the industry-owned digital asset platform to leverage blockchain technology in the tokenization of funds for use as collateral.
Goldman’s initiative aligns with the industry’s wider trend of streamlining the issuance, trading, and settlement of traditional assets like bonds and cash by leveraging blockchain technology. Tradeweb Markets Inc., a major electronic trading platform, announced that it had already signed on as Goldman’s first strategic partner. According to McDermott, the partnership will focus on exploring new commercial applications for the digital asset platform.
“If you are trying to build out a scalable marketplace, you want to have the right strategic participants embracing this technology.”
–Mathew McDermott
Goldman said it was exploring several other digital asset initiatives, such as facilitating secondary transactions for private digital asset companies and potentially restarting Bitcoin-backed lending activities.
Goldman’s history of spin-offs guarantees its success in the new plans
The bank’s digital assets platform, launched in 2022, had already been used for key transactions such as issuing bonds for the European Investment Bank. Goldman’s history also includes the successful spin-off of in-house-built software platforms like REDI Technologies and Simon, the structured investments marketplace that was part of Goldman’s Marquee platform.
However, the broader adoption of blockchain on Wall Street has been slow due to challenges such as interoperability and security concerns. Some companies were also reluctant to get involved in competitor-created systems. While some applications were live and few had reached significant scale, Wall Street’s blockchain efforts had been ongoing for almost a decade.
Nonetheless, Goldman believes that an industry-owned platform has the potential to overcome these challenges and unlock new opportunities. The bank aimed to drive the widespread adoption of blockchain technology in the financial industry by attracting strategic partners and focusing on practical use cases.
McDermott said Goldman’s new venture, which aims to facilitate secondary transactions in private digital asset companies for its clients, could make it easier for family offices and other clients looking for liquidity. He added that this would also allow buyers to take advantage of private market discounts.
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